Jeff Miller owns Miller Auto Body Repair. During some months, he seems to have sufficient cash to meet all needs and maintain a comfortable cash reserve balance. During other months, he is frustrated because his operating cash supply is severely depleted. As a result, he is establishing a borrowing agreement with a local bank. His objective is to borrow (on the first day of the month) or repay (on the last day of the month) on the loan each month, in $2,500 increments. His planned borrowings/repayments will be based upon a cash budget, and tied to the assumption that the company will end each month with no less than $10,000 of available cash. Evaluate the following facts relating to the period July 1 to September 30, and prepare a monthly cash budget. Whenever repayments are made on the loan, the repayment is to include all accrued interest from the time of the loan origination. Interest accrues at 1% per month. Miller Auto Body had $12,500 of cash on hand on July 1. Sales for May and June were $250,000 and $300,000, respectively. Anticipated sales for July to September are as follows: July ………………………..$ 225,000 August ………………………360,000 September ………………….310,000 Because much of the repair work is done for insurance companies, the pattern of collection for all sales is typically delayed as follows: 20% in the month of sale, 60% in the next following month, and 15% in the second following month. The other 5% is not expected

"Get 15% discount on your first 3 orders with us"
Use the following coupon

Order Now